BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, UNNAMED FIELD, JACKSON COUNTY, COLORADO |
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CAUSE NO. 531
DOCKET NO. 170900640
TYPE: ADDITIONAL WELLS
ORDER NO. 531-49 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 11, 2017, at the Durango Public Library, Program Room #2, 1900 East Third Avenue, Durango, Colorado, 81301, upon application for an order to approve a total of up to 13 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 531-2 for Section 13, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. SandRidge Exploration & Production LLC (Operator No. 10598) (“SandRidge” or “Applicant”), as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
4. Rule 318.a. of the Commission Rules provides a well to be drilled 2,500 feet or greater shall be located not less than 600 feet from any lease line, and shall be located not less than 1,200 feet from any other producible oil or gas well when drilling to the same common source of supply, unless authorized by the Commission upon hearing. Section 13, Township 7 North, Range 81 West, 6th P.M. is subject to this Rule for the Niobrara Formation.
5. On July 15, 2008, the Commission entered Order No. 531-2, which, among other things, established approximate 640-acre drilling and spacing units and authorized one horizontal well in each unit for certain lands in Townships 6 and 7 North, Ranges 80 and 81 West, 6th P.M., with the option to drill a second horizontal well, with a bottom hole location no closer than 600 feet from the boundaries of the unit, for production of gas and associated hydrocarbons from the Niobrara Formation. Section 13, Township 7 North, Range 81 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On September 14, 2015, the Commission entered Order No. 531-21, which 1) modified the setbacks for the drilling and spacing unit established by Order No. 531-2, and other lands, to allow 300 foot setbacks as to the unit boundaries and 150 foot inter-well setbacks, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and 2) approved up to four horizontal wells within the drilling and spacing unit established by Order No. 531-2, and other lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 13, Township 7 North, Range 81 West, 6th P.M. is subject to this Order for the Niobrara Formation.
7. On June 6, 2016, the Commission entered Order No. 531-28, which approved a total of eight horizontal wells within the drilling and spacing unit established by Order No. 531-2, and other lands, for production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 13, Township 7 North, Range 81 West, 6th P.M. is subject to this Order for the Niobrara Formation.
8. On October 24, 2016, the Commission entered Order No. 531-41, which modified Order No. 531-21 so as to allow 100 foot setbacks as to the northern unit boundary of the drilling and spacing unit established by Order No. 531-2. Section 13, Township 7 North, Range 81 West, 6th P.M. is subject to this Order for the Niobrara Formation.
9. On July 31, 2017, SandRidge, by its attorneys, filed with the Commission, pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to approve a total of 13 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 531-2 for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of any horizontal well to be no closer than 300 feet from the eastern, western and southern boundaries and no closer than 100 feet from the northern boundary, and no closer than 150 feet from the treated interval of another well producing from the same formation, unless the Director grants an exception:
Township 7 North, Range 81 West, 6th P.M.
Section 13: All
10. On August 11, 2017, supplemented August 24, 2017, SandRidge, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
11. Land testimony and exhibits submitted in support of the Application by Richard Silman, Senior Landman for SandRidge, showed that SandRidge holds oil and gas leasehold interests and has a right to drill in the Application Lands. Land testimony also confirmed that the wells will be drilled from no more than two multi-well pads within the Application Lands, unless the Director grants an exception, and the horizontal wellbores will be drilled with north/south orientations.
12. Geoscience testimony and exhibits submitted in support of the Application by Scott Cherry, Geologist for SandRidge, showed the Niobrara Formation is present throughout the Application Lands, is approximately 450 to 470 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.
13. Engineering testimony and exhibits submitted in support of the Application by Wesley K. McAlister, Reservoir Engineer for SandRidge, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 40.26 acres, and an appropriate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation.
14. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons and will not violate correlative rights.
15. SandRidge agreed to be bound by oral order of the Commission.
16. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should approve a total of up to 13 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 531-2 for Section 13, Township 7 North, Range 81 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. A total of up to 13 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 531-2 for the below described lands are hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of any horizontal well to be no closer than 300 feet from the eastern, western and southern boundaries and no closer than 100 feet from the northern boundary, and no closer than 150 feet from the treated interval of another well producing from the same formation, unless the Director grants an exception:
Township 7 North, Range 81 West, 6th P.M.
Section 13: All
2. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands, unless the Director grants an exception.
3. All horizontal wellbores permitted under this Order shall be drilled with north/south orientations.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 2nd day of October 2017, as of September 11, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
James P. Rouse, Acting Secretary